Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. What impact does lower fuel costs and other changes have on American Airline’s breakeven point? Original blog posting (January 27, 2015)

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. PEZ expects to raise its prices in 2015 PEZ candies are made from about 95% sugar, which makes the PEZ product cost particularly sensitive to changes in the cost of sugar Cost of sugar has been significantly increasing due to preliminary tariffs imposed by the U.S. Cost of labor has been increasing due to increases in the minimum wage in the U.S.

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 1 What cost standards will most likely be adjusted at PEZ for the rising costs? When do you think these standard adjustments will be made?

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 2 If the related cost standard is not adjusted, what variance(s) will be impacted by the rising cost of sugar? What department would typically be responsible for explaining this variance(s)?

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 3 If the related cost standard is not adjusted, what variance(s) will be impacted by the rising cost of labor? What department would typically be responsible for explaining this variance(s)?

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question Recap 1.What cost standards will most likely be adjusted at PEZ for the rising costs? When do you think these standard adjustments will be made? 2.If the related cost standard is not adjusted, what variance(s) will be impacted by the rising cost of sugar? What department would typically be responsible for explaining this variance(s)? 3.If the related cost standard is not adjusted, what variance(s) will be impacted by the rising cost of labor? What department would typically be responsible for explaining this variance(s)?

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Related video resources can be found at Questions or comments? Contact Dr. Wendy Tietz at